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   How does StarMine measure analysts on recommendations?
 
   StarMine measures analyst recommendation performance in several ways:
  • We measure an analyst's performance with respect to his or her recommendations on a single stock. An analyst is rewarded when he or she has a bullish recommendation on a stock that outperforms its industry, when he or she has a bearish recommendation on a stock that under-performs its industry, or when he or she has a neutral/hold recommendation on a stock that performs similarly to its industry.

  • We measure an analyst's performance across an industry using the concept of Industry Excess Return. This calculation compares a portfolio weighted based on the analyst's recommendations in an industry to a market-capitalization-weighted portfolio of all the stocks in the industry.

  • We measure an analyst's performance across all the stocks he or she covers using two techniques:

    • The Absolute Return metric tells you what your return would have been had you created a long/short portfolio based on the analyst's recommendations.
    • The Coverage-Relative Rating tells you how well an analyst performed, relative to other analysts, at distinguishing among the stocks in his or her coverage universe.

See glossary for: Recommendation


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